On 1 March 2015, the "Provisional Rules on Real Estate Registration" (hereinafter referred to as the "Rules") promulgated by the State Council on 24 November 2014 came into force, creating a unified national registration system for various types of real estate, and replacing the old diverse and localized system. Accompanying the new registration system is a national information sharing network of real estate registration, which will not only help simplify the whole registration procedure, but also facilitate the real-time disclosure of property owners' holdings across the country to relevant government bodies. Some have remarked that, on one hand, the Rules, are to keep abreast of the latest legislative developments and needs and, on the other hand, are intended to pave the way for further reforms in respect of property tax.1
Unified Real Estate Registration System
Formerly, the real estate registration system in China was a decentralized legal regime governed by a body of complicated, and sometimes, conflicting and intertwined regulations, each of which was tailored for a certain type of real estate and, more often than not, subject to the jurisdiction of a different government authority.
In contrast, the new unified registration system represents a system consolidated at the national level, comprehensively serving every type of registration relating to real estate, including but not limited to the land collectively owned by farmers, houses and buildings, forests, land including farmland and grasslands, construction land use rights, rural housing land use rights, water use rights, easement and mortgages.2
All of these different registrations are subject to the identical procedures set forth in the Rules and have, with effect from 1 March 2015, fallen under the direction and collective oversight of the Ministry of Land and Resources of the PRC (the "MLR"), while local governments at the county level or above shall nominate and appoint a certain authority to specifically assume the relevant responsibilities. Accordingly, the MLR has commenced setting up local Real Estate Registration Bureaus in various provinces. Also, it has collectively named each piece of the various types of real estate a "real estate unit" and separately formulated a unified coding system for registration of all such units. On 26 February 2015, the MLR published the generic form of Property Certificate and Property Registration Statement, which are to be issued to the property owners for all types of real estate registrations, while previously issued certificates will remain valid after the new certificates are adopted.3
Coordinated and Simplified Registration Procedures
Now, the application procedures for registration of different types of real estate rights are different from before: streamlined and coordinated by the Rules, thus bringing an end to problems arising from conflicts between different regulations in regard to the same or some closely related registrations. For example, pursuant to the "Measures on Land Registration", an interested party could unilaterally apply for the registration of an objection against another party's land use rights, but the "Measures on Housing Registration" implies that an interested party must ask the property owner to jointly apply for such objection registration when it concerns the ownership of houses. This, however, is in conflict with the "Property Law of the PRC", which provides that an interested party may apply for such objection registration where the property owner stated on the registration certificate does not agree to change the registration. The Rules have substantially changed the situation by establishing that an objection registration is to be treated as a typical real estate registration, and unilateral application is explicitly allowed, no matter which type of real estate right it is concerned with.
Additionally, it is also worth noting that previously, on-site inspection was expressly stipulated as a mandatory preceding step in the course of certain housing registrations, but under the Rules, the registration authorities may elect not to carry out such inspection. This reflects the Rules' tendency to simplify the entire registration process.
National Information Sharing Network
The unified real estate registration system will allow the real estate registration information to be shared on a real-time basis with all four hierarchical levels of real estate registration authorities and, in addition to the sharing of approval information and transaction information with relevant authorities in charge of housing, construction, agriculture, forests and maritime affairs. Real estate registration authorities shall refrain from requesting applicants to provide relevant information should such information be available or obtainable from the unified real estate registration system.
Furthermore, the departments of police, civil affairs, finance, tax, industry and commerce, audit and statistics are also promised access to this unified real estate registration system, which is regarded as a critical step in the ongoing anti-corruption campaign of China.
Apart from competent government authorities, only property owners and interested parties are allowed to access the pertinent registration information, and registration authorities are obliged to keep all of the information confidential, and subject to liability for any losses caused by their wrongful disclosure.
Spatial Boundaries of Land
Another noteworthy improvement made by the Rules is the requirement that real estate registration certificates should state the spatial boundaries of the land. Since 2007, the land use right has been extended to the space under and above ground pursuant to the "Property Law of the PRC" but, in the absence of practical registration rules and documented record, the property owners normally found it extremely difficult to claim for their rights over the space around the land. This new move in land registration will present property owners with an opportunity to make such rights clear in the future.
Even so, on a practical basis, it remains unclear whether the Rules could push the government to examine the issue and put the new rules into practice since the new form of Property Certificate unfortunately does not have a separate item relating to spatial boundaries. The implementation of the new rule is still to be tested.
Outstanding Issues and Further Development
Although the MLR is bound to launch the new national registration system nationwide from 1 March 2015, it is unavoidable that there will be a transition period, since there still exist many outstanding practical issues. For example, the concrete procedures for registration of change, transfer, cancellation and dispute over rights relating to real estate are still pending and to be further supplemented. Additionally, it remains to be seen how to solve any disputes or conflicts between the MLR and a registration authority that is appointed by local government to be in charge, but traditionally not subordinated to MLR. Furthermore, numerous regulations that would be in conflict with the Rules need to be remediated by relevant government departments; and the information sharing network is far from being in sight. As such, the Rules constitute a major, yet still preliminary step toward the unified real estate registration system of China, and it can be foreseen that competent authorities will promulgate further implementation rules in the near future.
2. The catch-all clause in Article 5 of the Rules indicates that the Rules are applicable for every type of real estate registration.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.